BASKETBALL FINANCE: Last 2 Minutes!!!

"I can do something else besides stuff a ball through a hoop. My biggest resource is my mind." - Kareem Abdul-Jabbar

After blogging about "No Other Woman"(love-triangle Filipino movie), which made about over 160 page views, I was thinking how can I top that!   The answer is maybe I will not.  But I still believe that after showbiz or "tsismis", basketball is still a favorite of Pinoys.
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Its sad to think that there might be no NBA games this season because of the lockout.  Anyway, we still have the PBA.  And I can say they have some interesting rookies, especially Paul Lee.  He can definitely shoot!
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Back to basketball finance.  Games are normally played in four quarters of 10 minutes (FIBA) or 12 minutes (NBA) each.  Whats nice before in the PBA was when the announcer would shout "LAST TWO MINUTES!!!". In personal finance, I've learned that we also play four quarters when it comes to our finances.
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The first quarter is CASH MANAGEMENT.  This relates to how we handle money.  Do we budget and control our expenses?  Do we pay ourselves first before spending?  Do we monitor and record the "ins" and "outs" of our cash flows and compute our net worth (i.e. assets minus liabilities)? Do we distinguish between "wants" and "needs"?  Overall, how is our relationship with money?  In basketball, the first quarter sets the tone of the game.  It gives you a feel on how the game will progress.  That is why, the first five players are very important.  Same with personal finance, our attitude and discipline in handling money is key.
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The second quarter is DEBT MANAGEMENT.   How is our debt-to-asset ratio?  Do we have more liabilities than assets?  Is our credit card balance like Pepsi MAX or Coke ZERO?  Are we experts now on "balance transfers" or simply getting a new debt to pay an old one?  In personal finance, financial planners advice people to invest in debt payment first, before investing in stocks, mutual funds, etc.  They even would advice that if you have excess cash in your savings accounts (that earn minimal interest), why not pay your credit cards first (which charge you an average interest of 3% per month).
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The third quarter is RISK MANAGEMENT.  This includes both life and non-life insurance protection for you and your family.  To demonstrate the importance of risk management in personal finance, I would like to share some statistics I found out from the World Heath Organization report of 2010 with regards to the Philippines:

• Due to its geographical location along the so-called Pacific Ring of Fire and the typhoon belt, the country faces various natural disasters such as typhoons, landslides, volcanic eruptions and earthquakes.
• Since 2006, the Philippines has consistently been among those countries around the world most often hit by natural disasters and, in 2009, it topped the list, ranking third in terms of mortalities (1334 deaths) and second in terms of number of victims (13.4 millions).
• Mosquito-borne diseases, such as malaria, dengue and filariasis, are an ever-present danger in endemic areas.
• Latest statistics (2005) show that cardiovascular diseases, cancers, chronic respiratory diseases and diabetes continue to be among the country's top 10 killers. Hypertension and diseases of the heart ranked fourth and ninth among the ten leading causes of illness in 2008.
• In a study conducted by the Food and Nutrition Research Institute (FNRI) in 2003, it was found that 90% of Filipinos had one or more of the following risk factors: physical inactivity, smoking, obesity, hypertension, diabetes and abnormal cholesterol.
• Accidents of all types, including road traffic crashes, rank fourth among the causes of mortality for all age groups. Road traffic accidents constitute the fifth leading cause of injury death, with a mortality rate of
  39.1/100 000.
• Average life expectancy for Filipinos is 70 years old.

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The fourth quarter in personal finance is WEALTH MANAGEMENT.  We now know how to handle money, pay/minimize our debts and protect ourselves.  The last step involves making our money work hard for us by using various investment vehicles (e.g. stocks, mutual funds, UITFs, business, etc.) that earn more than the current inflation of 4 to 5%.  Of course, we have to know the corresponding "risk" and "return" of a particular investment.  Generally, the higher the return or earnings, the higher the risk.  We need to assess ourselves too if we are conservative, moderate or aggressive when comes to investments.  Lastly, our investment strategies will depend on what we want to achieve, which is basically our personal financial goals.  Have you written down your short, medium and long-term financial goals? 
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By the way, I would like to give credit to Mr. Efren Ll. Cruz, RFP who conceptualized this CD-RW (Cash, Debt, Risk and Wealth management) in personal financial management. Thanks a lot Sir Efren!  
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Regardless of where we stand now.  Whether we are still trailing by 10 or even 50 points in the 2nd or 4th quarter, there is always hope.  We just need to make a decision from now on to JUST DO IT (by Nike) and believe that IMPOSSIBLE IS NOTHING (by Adidas).  In the PBA, the "never say die" Barangay Ginebra fans will fight to the finish.  After all, BILOG ANG BOLA!!!


Hope this helps,


Ge

Gerald Cantor is a Registered Financial Planner graduate and a Financial Consultant of Pru Life UK.  He is also a Certified Public Accountant and a Certified Internal Auditor.  Ge is proud to be an ex-OFW, a "career-shifter", a baller, a newby entrepreneur and most importantly, a "proud" dad of Gia (4yo) and Clarie (2yo).